Britain has brains but needs a bit more brawn

Chris Malley, who took over as head of the plastics firm in March, told the Yorkshire Post that taking more breakthroughs to market will make the rising stars of the sector less vulnerable to takeover by overseas companies.

He pinned the blame for the failure to capitalise on home-grown inventions on Britain’s venture capital industry, which he said is less dynamic than America’s.

Mr Malley added that the physical distance between UK inventors and overseas manufacturing companies makes it harder to develop sustainable products.

“We are a long, long way away from our customers in reality,” he said.

Mr Malley said politicians should address the issue and suggested that Britain needs a “whole cultural shift”.

Carclo is a leading light in the Yorkshire technology sector after transforming itself from a textiles company into a hi-tech printed electronics specialist.

Its conductive ink technology (CIT) is being used to create touchscreen sensors in partnership with US firm Atmel Corporation for the booming smartphone and tablet market.

Existing touchscreens use a transparent conductive film known as indium tin oxide (ITO), which is expensive and less effective on larger devices.

CIT allows developers to make larger, lighter, less power-hungry, sleeker designs for smartphones, tablets and other products.

The Ossett-based company announced its full-year results yesterday and said it made “encouraging strategic progress” during the year ending March 31, 2013.

Carclo reported revenues of £86.5m, down seven per cent on the previous year after the group withdrew from its low-margin automotive antenna business. It made a pre-tax profit of £5m, a fall of seven per cent.

The group virtually halved its debt following a £12.6m fundraising and $10m pre-payment from Atmel for its first shipment of touch sensors.

Robert Brooksbank, finance director, said it is “more appropriate for a technology business to have lower levels of debt”.

Carclo’s debt stands at £9.2m, which is held by two UK banks.

Michael Derbyshire, chairman, said he is confident that the group will make significant progress in the coming year.

He said CIT is “set to contribute substantially” and the core businesses are “in good shape”.

Last month the group opened its new CIT facility in Cambridge following a £3.5m investment.

Carclo expects CIT to generate revenues of between £8m-£12m this year, up from £700,000 last year. Three fifths of the group’s revenues come from supplying fine tolerance, injection-moulded plastic components, which are used in medical, optical and electronics products.

Carclo said its technical plastics division had “a challenging year” with sales only marginally ahead of the previous year, at £57.1m, but prospects for growth are good and production capacity is being expanded.

The remaining revenues come from the supply of specialised precision components to the premium aerospace and automotive industries, with customers including Aston Martin, Bugatti Veyron, Lamborghini and Rolls Royce.

Analysts at Liberum Capital said: “The opportunities facing CIT in the non-ITO touchscreen market remain very substantial and are growing rapidly on the back of strong growth in tablets, smartphones and touchscreen enabled notebooks.

“We believe Carclo is in pole position amongst all the non-ITO alternatives and a smooth ramp in the next six months will cement that position of leadership further.

“The growth prospects for CIT remain very exciting.”

Analysts at N+1 Singer said CIT took some significant steps forward last year with tablet production in volume the highlight.

They said Carclo’s other divisions are also well positioned for growth and “shouldn’t be forgotten”.

“We expect a strong contribution from CIT in 2014 and a doubling of this in 2015,” they added in a note.

Mr Derbyshire paid tribute to former chief executive Ian Williamson and former chairman Christopher Ross who retired earlier this year for their “long, dedicated and successful service” and said “they have laid excellent foundations”.

Mr Williamson joined Carclo in 1995 when the company was known for card clothing – which provided its name – a traditional process using specialised wire to comb textiles and produce high quality yarn.

It was his brainwave to transform the business into a hi-tech printed electronics specialist.

@bernardginns